Oil prices fall 2 per cent after end-of-week rally

Crude oil tanks at Kinder Morgan's terminal are seen in Sherwood Park, near Edmonton, in this fiel photo.

CHRIS HELGREN/REUTERS

David Gaffen

NEW YORK

Reuters

August 21, 2017August 21, 2017

Oil prices fell nearly 2 per cent ahead of monthly contract expiration on Monday, pulling back from last week's rally built on signs the global market is starting to rebalance from chronic oversupply.

Brent crude futures settled down 2 per cent, or $1.06 at $51.66 a barrel, while U.S. West Texas Intermediate crude futures ended down $1.14 a barrel, or 2.4 per cent, at $47.37 a barrel ahead of the September contract's expiration on Tuesday.

Both contracts had risen 3 per cent on Friday, and traders said the day's action was marked by profit-taking.

Story continues below advertisement

"Oil prices are experiencing some late summer chop with low trading volume and not much news. I think we are going to be stuck in a neutral for the next two weeks without big moves in either direction," said Joe McMonigle, senior energy analyst at Hedgeye.

U.S. oil prices have been on the upswing since bottoming out near $43 a barrel in mid-June, though the market has not been able to sustain a rally above $50. Despite the selloff, the market remains in its recent range, said Phil Flynn, analyst at Price Futures Group in Chicago.

The world remains awash with oil despite a deal struck by some of the world's biggest producers to rein in output. Rising U.S. production has been a major factor keeping supply and demand from balancing.

U.S. output may soon slow, as energy companies cut rigs drilling for oil for a second week in three, energy services firm Baker Hughes said on Friday.

Crude stockpiles are forecast to have declined by 3.4 million barrels for the week to Aug. 18, according to a Reuters survey, which would be the eighth straight week of declines.

U.S. commercial crude inventories have fallen almost 13 per cent from their March peaks to 466.5 million barrels.

Story continues below advertisement

Story continues below advertisement

The oil minister of Kuwait, which is participating in OPEC-led production cuts, said U.S. crude stocks were falling more than expected because output cuts were taking effect.

Azerbaijan, not an OPEC member but one of the countries which has committed to production cuts, remains committed to reducing output, the head of state oil company SOCAR told Reuters.

Libya's National Oil Corp declared force majeure on loadings of Sharara crude from the Zawiya oil terminal on Sunday.

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.